No time for 'beggar thy neighbor'

From a December address by the US Ambassador to West Germany before the Deutsche Atlantische Gesellschaft in Bonn.

It is reasonable to expect that any improvement in the American economy also will be felt before too many months pass in Western Europe.

Unemployment, nevertheless, will remain high in the West for an uncomfortable period, since the pace of recovery is likely to be slow in the present instance. There are compelling reasons for this gradualness.

First, there are as yet hardly any signs that contracts for business construction or orders for business equipment have begun to increase either in the United States or in Western Europe.

Second, most of the larger banks throughout the West must now realize that their lending policies, both at home and abroad, were excessively liberal during the 1970s. They will consequently be more cautious lenders - perhaps excessively cautious lenders - in the years immediately ahead.

Third, many of the less developed countries - not only Mexico, Brazil, and Argentina, which lately have figured so heavily in the press - are at present unable to make timely payments of the interest or principal that is due on their overextended indebt-edness.

These financial difficulties constitute a grave, but I believe still manageable, danger to the international banking system. Under the best of circumstances, however, great austerity will need to be practiced in many of the less developed countries, and their reduced imports will inevitably restrict the pace of Western economic recovery over the next two or three years, if not longer.

If my assessment of the economic outlook is anywhere near the mark, political tensions on account of economic difficulties may well continue to trouble the alliance. To make progress on economic issues in the years immediately ahead, it is particularly important that every country avoid ''beggar-thy-neighbor'' policies. We cannot afford to think in terms of winners and losers when it comes to solving our common problems.

It is essential, therefore, that member countries of the alliance mobilize the vast economic and political statesmanship that is at their disposal. Cooperation among economic ministries, finance ministries, central banks, private commercial banks, and international financial agencies, which has not always been close, must become very much closer.

The heads of Western governments, who thus far have been reasonably successful in controlling the disease of protectionism, must work still more earnestly toward this vital objective. Meetings among members of the foreign policy and defense establishments of the alliance must occur still more frequently and become more thorough, as well as more timely, so that misunderstandings among their governments are kept to a minimum.

These are the paths to confidence in the security and prosperity of the industrial democracies that are joined in the brotherhood of the Atlantic alliance.

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